Exhibit 99.1
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited - Expressed in United States dollars)
Three and nine months period ended September 30, 2020
MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING
CONDENSED CONSOLIDATED INTERIM FINANCIAL REPORTING
The accompanying condensed consolidated interim financial statements of Entrée Resources Ltd. (the “Company”) have been prepared by management in accordance with International Financial Reporting Standards (“IFRS”). Management acknowledges responsibility for the preparation and presentation of the condensed consolidated interim financial statements, including responsibility for significant accounting estimates and the choice of accounting principles and methods that are appropriate to the Company’s circumstances.
NOTICE OF NO AUDITOR REVIEW OF CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
The Company’s independent auditor has not performed a review of these condensed consolidated interim financial statements in accordance with standards established by the Canadian Institute of Chartered Professional Accountants for a review of interim financial statements by a company’s auditor.
Entrée Resources Ltd.
Condensed Consolidated Interim Statements of Financial Position
As at September 30, 2020 and December 31, 2019 (Unaudited)
(expressed in thousands of U.S. dollars, except where indicated)
| Note | September 30, 2020 | December 31, 2019 | ||||||||
| Assets | ||||||||||
| Current assets | ||||||||||
| Cash and cash equivalents | $ | 7,402 | $ | 5,380 | ||||||
| Receivables and prepaid expenses | 47 | 122 | ||||||||
| Prepaid licence fees | 202 | 158 | ||||||||
| 7,651 | 5,660 | |||||||||
| Non-current assets | ||||||||||
| Property and equipment | 233 | 316 | ||||||||
Oyu Tolgoi asset | 3 | 154 | 114 | |||||||
| Deposits and other | 11 | 12 | ||||||||
| 398 | 442 | |||||||||
| Total assets | $ | 8,049 | $ | 6,102 | ||||||
| Liabilities | ||||||||||
| Current liabilities | ||||||||||
| Accounts payable and accrued liabilities | 12 | $ | 81 | $ | 72 | |||||
| Current portion of lease liabilities | 4 | 103 | 103 | |||||||
| 184 | 175 | |||||||||
| Non-current liabilities | ||||||||||
| Lease liabilities | 4 | 121 | 201 | |||||||
| Loan payable to Oyu Tolgoi LLC | 5 | 9,503 | 9,035 | |||||||
| Deferred revenue | 6 | 45,125 | 43,671 | |||||||
| 54,749 | 52,907 | |||||||||
| Total liabilities | 54,933 | 53,082 | ||||||||
| Shareholders’ deficiency | ||||||||||
| Share capital | 7 | 175,922 | 173,095 | |||||||
| Reserves | 22,846 | 22,445 | ||||||||
| Accumulated other comprehensive income (loss) | 762 | (407 | ) | |||||||
| Deficit | (246,414 | ) | (242,113 | ) | ||||||
| Total shareholders’ deficiency | (46,884 | ) | (46,980 | ) | ||||||
| Total liabilities and shareholders’ deficiency | $ | 8,049 | $ | 6,102 | ||||||
Nature of operations (Note 1)
Commitments and contingencies (Note 11)
Subsequent events (Note 13)
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
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Entrée Resources Ltd.
Condensed Consolidated Interim Statements of Comprehensive Loss
For the three and nine months ended September 30, 2020 and 2019 (Unaudited)
(expressed in thousands of U.S. dollars, except where indicated)
| Note | Three months ended September 30 | Nine months ended September 30 | ||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||||
| Expenses | ||||||||||||||||||
| Project expenditures | $ | 59 | $ | 63 | $ | 173 | $ | 134 | ||||||||||
| General and administrative | 286 | 327 | 993 | 1,091 | ||||||||||||||
| Share-based compensation | 8 | – | – | – | 1 | |||||||||||||
| Depreciation | 25 | 26 | 76 | 80 | ||||||||||||||
| Operating loss | 370 | 416 | 1,242 | 1,306 | ||||||||||||||
| Foreign exchange (gain) loss | (155 | ) | 84 | 162 | (58 | ) | ||||||||||||
| Interest income | (15 | ) | (37 | ) | (60 | ) | (105 | ) | ||||||||||
| Interest expense | 5 | 84 | 81 | 253 | 237 | |||||||||||||
| Loss from equity investee | 3 | 37 | 77 | 126 | 177 | |||||||||||||
| Finance costs | 5 | 6 | 15 | 23 | ||||||||||||||
| Deferred revenue finance costs | 6 | 869 | 820 | 2,563 | 2,413 | |||||||||||||
| Gain on sale of investments | – | – | – | (123 | ) | |||||||||||||
| Net loss | 1,195 | 1,447 | 4,301 | 3,870 | ||||||||||||||
| Other comprehensive loss (income) | ||||||||||||||||||
| Foreign currency translation | 1,043 | (536 | ) | (1,169 | ) | 1,188 | ||||||||||||
| Total comprehensive loss | $ | 2,238 | $ | 911 | $ | 3,132 | $ | 5,058 | ||||||||||
| Net loss per common share | ||||||||||||||||||
| Basic and fully diluted | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.02 | ) | ||||||
| Weighted average number of common shares outstanding | ||||||||||||||||||
| Basic and fully diluted (000’s) | 177,258 | 174,871 | 176,079 | 174,865 | ||||||||||||||
| Total common shares issued and outstanding (000’s) | 7 | 185,748 | 175,871 | 185,748 | 174,871 | |||||||||||||
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
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Entrée Resources Ltd.
Condensed Consolidated Interim Statements of Changes in Shareholders’ Deficiency
For the nine months ended September 30, 2020 and 2019 (Unaudited)
(expressed in thousands of U.S. dollars, except where indicated)
| Note | Number of Shares (000’s) | Share capital | Reserves | Accumulated other comprehensive income (loss) | Deficit | Total | ||||||||||||||||||||
| Balance at December 31, 2019 | 175,470 | $ | 173,095 | $ | 22,445 | $ | (407 | ) | $ | (242,113 | ) | $ | (46,980 | ) | ||||||||||||
| Net loss and comprehensive income | – | – | – | 1,169 | (4,301 | ) | (3,132 | ) | ||||||||||||||||||
| Issuance of share capital - private placement | 7 | 10,278 | 2,827 | 401 | – | – | 3,228 | |||||||||||||||||||
| Balance at September 30, 2020 | 185,748 | $ | 175,922 | $ | 22,846 | $ | 762 | $ | (246,414 | ) | $ | (46,884 | ) | |||||||||||||
| Balance at December 31, 2018 | 174,807 | $ | 172,955 | $ | 22,199 | $ | 1,688 | $ | (236,591 | ) | $ | (39,749 | ) | |||||||||||||
| Adjustment on initial application of IFRS 16 | – | – | – | – | 2 | 2 | ||||||||||||||||||||
| Net loss and comprehensive loss | – | – | – | (1,188 | ) | (3,870 | ) | (5,058 | ) | |||||||||||||||||
| Share-based compensation | – | – | 1 | – | – | 1 | ||||||||||||||||||||
| Issuance of share capital - share options | 64 | 51 | (48 | ) | – | – | 3 | |||||||||||||||||||
| Balance at September 30, 2019 | 174,871 | $ | 173,006 | $ | 22,152 | $ | 500 | $ | (240,459 | ) | $ | (44,801 | ) | |||||||||||||
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
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Entrée Resources Ltd.
Condensed Consolidated Interim Statements of Cash Flows
For the nine months ended September 30, 2020 and 2019 (Unaudited)
(expressed in thousands of U.S. dollars, except where indicated)
| Note | 2020 | 2019 | ||||||||
| Cash flows used in operating activities | ||||||||||
| Net loss | $ | (4,301 | ) | $ | (3,870 | ) | ||||
| Items not affecting cash: | ||||||||||
| Depreciation | 76 | 80 | ||||||||
| Share-based compensation | 8 | – | 1 | |||||||
| Loss from equity investee | 3 | 312 | 366 | |||||||
| Interest expense | 5 | 253 | 237 | |||||||
| Finance cost, net | 5 | 20 | ||||||||
| Unrealized foreign exchange gains | (79 | ) | (264 | ) | ||||||
| Deferred revenue finance costs | 6 | 2,563 | 2,411 | |||||||
| Gain on sale of investment and other | – | (118) | ||||||||
| (1,171 | ) | (1,137 | ) | |||||||
| Changes in non-cash operating working capital: | ||||||||||
| Decrease in receivables and prepaids | 75 | 9 | ||||||||
| Increase (decrease) in accounts payable and accruals | 8 | (279 | ) | |||||||
| (1,088 | ) | (1,407 | ) | |||||||
| Cash flows from investing activities | ||||||||||
| Proceeds from sale of investments | – | 1,035 | ||||||||
| – | 1,035 | |||||||||
| Cash flows from (used in) financing activities | ||||||||||
| Proceeds from issuance of common shares - private placement | 7 | 3,313 | – | |||||||
| Finance fees paid - private placement | 7 | (85 | ) | – | ||||||
| Repayment of lease liability | (77 | ) | (61 | ) | ||||||
| Proceeds from issuance of common shares - share options | – | 4 | ||||||||
| 3,151 | (57 | ) | ||||||||
| Increase (decrease) in cash and cash equivalents | 2,063 | (429 | ) | |||||||
| Cash and cash equivalents - beginning of the period | 5,380 | 6,154 | ||||||||
| Effect of exchange rate changes on cash and cash equivalents | (41 | ) | 23 | |||||||
| Cash and cash equivalents - end of the period | $ | 7,402 | $ | 5,748 | ||||||
Cash and cash equivalents is represented by: | ||||||||||
| Cash | $ | 7,368 | $ | 5,714 | ||||||
| Cash equivalents | 34 | 34 | ||||||||
| Total cash and cash equivalents | $ | 7,402 | $ | 5,748 | ||||||
Supplemental cash flow information (Note 10)
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
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Entrée Resources Ltd.
Notes to Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2020 and 2019 (Unaudited)
(tabular amounts expressed in thousands of U.S. dollars, except per share amounts and where indicated)
| 1 | Nature of operations |
Entrée Resources Ltd., together with its subsidiaries (collectively referred to as the “Company” or “Entrée”), is focused on the development and exploration of mineral property interests. The Company is principally focused on its Entrée/Oyu Tolgoi JV Property in Mongolia (Note 3).
The Company has its primary listing in Canada on the Toronto Stock Exchange (“TSX”) and its common shares also trade in the United States on the Over-the-Counter OTCQB Venture Market (“OTCQB”) under the symbol “ERLFF”.
The Company’s registered office is at Suite 2900, 550 Burrard Street, Vancouver, BC, V6C 0A3, Canada.
All amounts are expressed in United States dollars, except for certain amounts denoted in Canadian dollars (“C$”).
These condensed consolidated interim financial statements have been prepared on the basis of accounting principles applicable to a going concern which assumes that the Company will be able to continue for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of business. The Company estimates it has adequate financial resources to satisfy its obligations over the next 12month period.
| 2 | Basis of presentation |
The Company prepares its condensed consolidated interim financial statements in accordance with International Accounting Standards 34, Interim Financial Reporting (“IAS 34”), under International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and interpretation of the International Reporting Interpretations Committee (“IFRIC”). These should be read in conjunction with the Company’s annual audited consolidated financial statements as at and for the year ended December 31, 2019 (“annual financial statements”). The accounting policies and critical estimates applied by the Company in these condensed consolidated interim financial statements are the same as those applied in the Company’s annual financial statements, unless otherwise stated.
The condensed consolidated interim financial statements were approved by the Audit Committee of the Board of Directors on October 29, 2020.
| 3 | Oyu Tolgoi asset |
Entrée/Oyu Tolgoi JV Property
The Company has a carried 20% participating joint venture interest in two of the Oyu Tolgoi project deposits, and a carried 20% or 30% participating joint venture interest (depending on the depth of mineralization) in the surrounding land package located in the South Gobi region of Mongolia (the “Entrée/Oyu Tolgoi JV Property”). The Entrée/Oyu Tolgoi JV Property is comprised of the eastern portion of the Shivee Tolgoi mining licence, which hosts the Hugo North Extension copper-gold deposit, and all of the Javhlant mining licence, which hosts the majority of the Heruga copper-gold-molybdenum deposit. The Shivee Tolgoi and Javhlant mining licences were granted by the Mineral Resources Authority of Mongolia in October 2009. Title to the two licences is held by the Company.
In October 2004, the Company entered into an arm’s-length Equity Participation and Earn-In Agreement (the “Earn-In Agreement”) with Turquoise Hill Resources Ltd. (“Turquoise Hill”). Under the Earn-In Agreement, Turquoise Hill agreed to purchase equity securities of the Company and was granted the right to earn an interest in what is now the Entrée/Oyu Tolgoi JV Property. Most of Turquoise Hill’s rights and obligations under the Earn-In Agreement were subsequently assigned by Turquoise Hill to what was then its wholly-owned subsidiary, Oyu Tolgoi LLC (“OTLLC”). The Government of Mongolia subsequently acquired a 34% interest in OTLLC from Turquoise Hill.
On June 30, 2008, OTLLC gave notice that it had completed its earn-in obligations by expending a total of $35 million on exploration of the Entrée/Oyu Tolgoi JV Property. OTLLC earned an 80% interest in all minerals extracted below a sub-surface depth of 560 metres from the Entrée/Oyu Tolgoi JV Property and a 70% interest in all minerals extracted from surface to a depth of 560 metres from the Entrée/Oyu Tolgoi JV Property. In accordance with the Earn-In Agreement, the Company and OTLLC formed a joint venture (the “Entrée/Oyu Tolgoi JV”) on terms annexed to the Earn-In Agreement (the “JVA”).
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Entrée Resources Ltd.
Notes to Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2020 and 2019 (Unaudited)
(tabular amounts expressed in thousands of U.S. dollars, except per share amounts and where indicated)
The portion of the Shivee Tolgoi mining licence outside of the Entrée/Oyu Tolgoi JV Property, Shivee West, is 100% owned by the Company, but is subject to a right of first refusal by OTLLC. In October 2015, the Company entered into a License Fees Agreement with OTLLC, pursuant to which the parties agreed to negotiate in good faith to amend the JVA to include Shivee West in the definition of Entrée/Oyu Tolgoi JV Property. The parties also agreed that the annual licence fees for Shivee West would be for the account of each joint venture participant in proportion to their respective interests, with OTLLC contributing the Company’s 20% share charging interest at prime plus 2% (Note 5).
The conversion of the original Shivee Tolgoi and Javhlant exploration licences into mining licences was a condition precedent to the Investment Agreement (the “Oyu Tolgoi Investment Agreement”) between Turquoise Hill, OTLLC, the Government of Mongolia and Rio Tinto International Holdings Limited. The licences are part of the contract area covered by the Oyu Tolgoi Investment Agreement, although the Company is not a party to the Oyu Tolgoi Investment Agreement. The Shivee Tolgoi and Javhlant mining licences were each issued for a 30 year term and have rights of renewal for two further 20 year terms.
As of September 30, 2020, the Entrée/Oyu Tolgoi JV had expended approximately $34.0 million (December 31, 2019 - $32.9 million) to advance the Entrée/Oyu Tolgoi JV Property. Under the terms of the Entrée/Oyu Tolgoi JV, OTLLC contributed on behalf of the Company its required participation amount charging interest at prime plus 2% (Note 5).
Investment - Entrée/Oyu Tolgoi JV Property
For accounting purposes, the Company treats its interest in the Entrée/Oyu Tolgoi JV as a 20% equity investment. Historically, all Company expenditures related to its interest in the Entrée/Oyu Tolgoi JV have been expensed as incurred through the statement of comprehensive loss or recognized as part of the Company’s share of the loss of the joint venture.
The Company’s share of the loss of the joint venture was $0.1 million for the nine months ended September 30, 2020 (2019 - $0.2 million). The joint venture has nominal current assets and liabilities, approximately $0.5 million of non-current assets and approximately $34.0 million of non-current liabilities. The loss for the joint venture for the nine months ended September 30, 2020 was approximately $1.1 million (2019 - approximately $1.4 million).
The Entrée/Oyu Tolgoi JV investment carrying value at September 30, 2020 was $0.2 million (December 31, 2019 - $0.1 million) and was recorded in Oyu Tolgoi asset on the statements of financial position.
| 4 | Leases |
Lease liability
| September 30, 2020 | December 31, 2019 | |||||||
| Lease liability | $ | 224 | $ | 304 | ||||
| Less: current portion | (103 | ) | (103 | ) | ||||
| Long-term portion | $ | 121 | $ | 201 | ||||
Undiscounted lease payments
| September 30, 2020 | December 31, 2019 | |||||||
| Less than one year | $ | 119 | $ | 123 | ||||
| One to five years | 181 | 216 | ||||||
| $ | 300 | $ | 339 | |||||
Interest expense on the lease liability amounted to $0.0 million for the nine months ended September 30, 2020 (2019 - $0.0 million).
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Entrée Resources Ltd.
Notes to Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2020 and 2019 (Unaudited)
(tabular amounts expressed in thousands of U.S. dollars, except per share amounts and where indicated)
| 5 | Loan payable to Oyu Tolgoi LLC |
Under the terms of the Entrée/Oyu Tolgoi JV (Note 3), Entrée has elected to have OTLLC contribute funds to approved joint venture programs and budgets on the Company’s behalf. Interest on each loan advance shall accrue at an annual rate equal to OTLLC’s actual cost of capital or the prime rate of the Royal Bank of Canada, plus two percent (2%) per annum, whichever is less, as at the date of the advance. The loan is non-recourse and will be repayable by the Company monthly from ninety percent (90%) of the Company’s share of available cash flow from the Entrée/Oyu Tolgoi JV. In the absence of available cash flow, the loan will not be repayable. The loan is not expected to be repaid within one year.
During the nine months ended September 30, 2020, the Company recorded interest expense of $0.3 million in connection with the loan (2019 - $0.2 million).
| 6 | Deferred revenue |
The Company has an agreement to use future payments that it receives from its mineral property interests to purchase and deliver gold, silver and copper credits to Sandstorm Gold Ltd. (“Sandstorm”) (the “Sandstorm Agreement”).
Under the terms of the Sandstorm Agreement, Sandstorm provided the Company with a net deposit of C$30.9 million (the “Deposit”) in exchange for the future delivery of gold, silver and copper credits equivalent to:
| • | 28.1% of Entrée’s share of gold and silver, and 2.1% of Entrée’s share of copper, produced from the Shivee Tolgoi mining licence (excluding Shivee West); and |
| • | 21.3% of Entrée’s share of gold and silver, and 2.1% of Entrée’s share of copper, produced from the Javhlant mining licence. |
Upon the delivery of metal credits, Sandstorm will make a cash payment to the Company equal to the lesser of the prevailing market price and $220 per ounce of gold, $5 per ounce of silver and $0.50 per pound of copper (subject to inflation adjustments). After approximately 8.6 million ounces of gold, 40.3 million ounces of silver and 9.1 billion pounds of copper have been produced from the entire current Entrée/Oyu Tolgoi JV Property, the cash payment will be increased to the lesser of the prevailing market price and $500 per ounce of gold, $10 per ounce of silver and $1.10 per pound of copper (subject to inflation adjustments). To the extent that the prevailing market price is greater than the amount of the cash payment, the difference between the two will be credited against the Deposit.
The Deposit has been accounted for as deferred revenue on the statement of financial position and is subject to foreign currency fluctuations upon conversion to US dollars at each reporting period. The Deposit contains a significant financing component and, as such, the Company recognizes a financing charge at each reporting period and grosses up the deferred revenue balance to recognize the significant financing element that is part of this contract at a discount rate of 8%.
This arrangement does not require the delivery of actual metal, and the Company may use revenue from any of its assets to purchase the requisite amount of metal credits.
| 7 | Share capital |
The Company’s authorized share capital consists of unlimited common shares without par value. At September 30, 2020, the Company had 185,748,074 (December 31, 2019 - 175,470,074) shares issued and outstanding.
Private placement
On September 14, 2020, the Company closed a non-brokered private placement issuing 10,278,000 units at a price of C$0.43 per unit for aggregate gross proceeds of C$4.4 million. Each unit consisted of one common share of the Company and one-half of one transferable common share purchase warrant (a “Warrant”"). Each whole Warrant will entitle the holder to acquire one additional common share of the Company at a price of C$0.60 per share for a period of 3 years. The Company paid a finder’s fee of C$86,000 equal to 5% of aggregate gross subscription proceeds received by the Company and recognized net proceeds of C$4.3 million after deducting share issuance costs.
9
Entrée Resources Ltd.
Notes to Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2020 and 2019 (Unaudited)
(tabular amounts expressed in thousands of U.S. dollars, except per share amounts and where indicated)
| 8 | Share options and warrants |
The Company provides share-based compensation to its directors, officers, employees, and consultants through grants of share options.
| a) | Share options |
The Company has adopted a stock option plan (the “Plan”) to grant options to directors, officers, employees and consultants to acquire up to 10% of the issued and outstanding shares of the Company. Options granted can have a term of up to ten years and an exercise price typically not less than the Company's closing share price on the TSX on the last trading day before the date of grant. Vesting is determined at the discretion of the Board of Directors.
Under the Plan, an option holder may elect to transform an option, in whole or in part and, in lieu of receiving shares to which the terminated option relates (the “Designated Shares”), receive the number of shares, disregarding fractions, which, when multiplied by the weighted average trading price of the shares on the TSX during the five trading days immediately preceding the day of termination (the “Fair Value” per share) of the Designated Shares, has a total dollar value equal to the number of Designated Shares multiplied by the difference between the Fair Value and the exercise price per share of the Designated Shares.
Share option transactions are summarized as follows:
| September 30, 2020 | ||||||||
| Number of share options (000’s) | Weighted average exercise price C$ | |||||||
| Outstanding - beginning of period | 9,945 | 0.43 | ||||||
| Forfeited/Expired | (100 | ) | 0.32 | |||||
| Outstanding - end of period | 9,845 | 0.43 | ||||||
At September 30, 2020, the following stock options were outstanding and exercisable:
| Number of share options (000`s) | Exercise price per share option C$ | Expiry date |
| 1,200 | 0.28 - 0.30 | Nov - Dec 2020 |
| 2,210 | 0.33 - 0.36 | Mar - Nov 2021 |
| 1,880 | 0.52 - 0.62 | May - Oct 2022 |
| 2,265 | 0.55 - 0.63 | Feb - Dec 2023 |
| 2,290 | 0.365 | Dec 2024 |
| 9,845 |
| September 30, 2020 | |
| Weighted average exercise price for exercisable share options | C$0.43 |
| Weighted average share price for share options exercised | n/a |
| Weighted average years to expiry for exercisable share options | 2.6 Years |
10
Entrée Resources Ltd.
Notes to Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2020 and 2019 (Unaudited)
(tabular amounts expressed in thousands of U.S. dollars, except per share amounts and where indicated)
| b) | Share purchase warrants |
At September 30, 2020, the following share purchase warrants were outstanding:
| Number of share purchase warrants (000’s) | Exercise price per share purchase warrant C$ | Expiry date |
| 8,655 | 0.55 | January 10, 2022 |
| 610 | 0.55 | January 12, 2022 |
| 5,139 | 0.60 | September 13, 2023 |
On September 14, 2020, the Company issued 5,139,000 Warrants as part of the non-brokered private placement (Note 7). Each Warrant entitles the holder to acquire one additional common share of the Company at a price of C$0.60 per share for a period of 3 years.
There has been no exercise or cancellation of warrants as at September 30, 2020.
| 9 | Financial instruments |
| a) | Fair value classification of financial instruments |
The fair value hierarchy establishes three levels to classify the inputs to valuation techniques used to measure fair value. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (prices) or indirectly (derived from prices). Level 3 inputs are for the assets or liabilities that are not based on observable market data (unobservable inputs).
The Company’s financial instruments consist of cash and cash equivalents, receivables, deposits, accounts payable and accrued liabilities, loan payable and lease liabilities.
The carrying values of receivables and accounts payable and accrued liabilities approximate their fair value due to their short terms to maturity. Cash and cash equivalents are measured at fair value using Level 1 inputs.
The following table summarizes the classification and carrying values of the Company’s financial instruments at September 30, 2020:
| September 30, 2020 | FVTPL | Amortized cost (financial assets) | Amortized cost (financial liabilities) | Total | ||||||||||||
| Financial assets | ||||||||||||||||
| Cash and cash equivalents | $ | 7,402 | $ | – | $ | – | $ | 7,402 | ||||||||
| Receivables | – | 27 | – | 27 | ||||||||||||
| Deposits | – | 11 | – | 11 | ||||||||||||
| Total financial assets | $ | 7,402 | $ | 38 | $ | – | $ | 7,440 | ||||||||
11
Entrée Resources Ltd.
Notes to Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2020 and 2019 (Unaudited)
(tabular amounts expressed in thousands of U.S. dollars, except per share amounts and where indicated)
| Financial liabilities | ||||||||||||||||
| Accounts payable and accrued liabilities | $ | – | $ | – | $ | 81 | $ | 81 | ||||||||
| Lease liabilities | – | – | 224 | 224 | ||||||||||||
| Loan payable | – | – | 9,503 | 9,503 | ||||||||||||
| Total financial liabilities | $ | – | $ | – | $ | 9,808 | $ | 9,808 | ||||||||
There have been no transfers between fair value levels during the reporting period.
| 10 | Supplemental cash flow information |
Unless disclosed elsewhere, there were no significant non-cash transactions during the nine month periods ended September 30, 2020 and 2019.
| 11 | Commitments and contingencies |
As at September 30, 2020, the Company had the following commitments:
| Total | Less than 1 year | 1 - 3 years | 3-5 years | More than 5 years | ||||||||||||||||
| Lease commitments | $ | 300 | $ | 119 | $ | 181 | $ | – | $ | – | ||||||||||
Under the terms of the Sandstorm Agreement, the Company may be subject to a contingent liability if certain events occur (Note 6).
| 12 | Related party transactions |
The Company’s related parties include key management personnel and directors. Direct remuneration paid to the Company’s directors and key management personnel during the nine month periods ended September 30, 2020 and 2019 are as follows:
| 2020 | 2019 | |||||||
| Directors’ fees | $ | 118 | $ | 99 | ||||
| Salaries and benefits | $ | 422 | $ | 411 | ||||
As of September 30, 2020, included in the accounts payable and accrued liabilities balance on the condensed consolidated interim statement of financial position is $0.0 million (December 31, 2019 - $0.0 million) due to the Company’s directors and key management personnel.
Upon a change of control of the Company, amounts totaling $1.1 million (December 31, 2019 - $1.1 million) will become payable to certain officers and management personnel of the Company.
| 13 | Subsequent events |
Subsequent to September 30, 2020, stock options to purchase 175,000 common shares with an exercise price of C$0.30 were exercised and the Company received gross proceeds of C$52,500.
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